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Predicted Rise in Hotel Room Rates Revised Upward
Jun 19, 04 | 12:29 am
The strong rebound in the hotel industry has prompted PricewaterhouseCoopers (PwC) to revise upward its prediction of hotel room-rate increases for this year, from 1.9 percent about two months ago to 3 percent last week.
The hospitality practice of the professional services firm also predicted that average daily rates will rise 3 percent next year over this year. Rates had remained flat last year and dropped 1.4 percent in each of the previous two years.
In its latest report, PwC forecast that average rates nationwide will hit $85.64 this year and $88.20 next year.
PwC also predicted that occupancy this year will increase only about half as much as the rise in room rates, as measured by percentage, indicating that hoteliers feel confident enough about the rebound to strengthen rates rather than primarily focus on filling hotel rooms.
PwC forecasts that occupancy will reach 60.8 percent this year and will increase nearly 1 percent next year. Occupancy nationally improved less than one-half of one percent last year and declined the previous two years, including a steep 5.6-percent drop in 2001.
Revenue per available room, known as RevPAR and a key measure of hotel productivity, will jump 5.8 percent this year, to $52.03, and 4.5 percent next year, to $54.40, according to PwC. By comparison, RevPAR gained one-half of one percent last year and lost 2.6 percent in 2002 and 6.9 percent in 2001.
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